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Free AccessAustralia Construction Index Expands at Highest on Record
--New Orders, Commercial Activity Highest in 12 Years
SYDNEY (MNI) - AI Group/Housing Industry Association Performance of
Construction Index (Australian PCI) for July published Monday.
July Change from Previous Month
----------------------------------------------------------
Australian PCI 60.5 +4.5
Activity - Overall 58.3 +5.2
Activity - Houses 62.4 +3.4
Activity - Apartments 52.6 +4.3
Activity - Commercial 64.3 +9.8
Activity - Engineering 57.5 +6.9
New Orders 64.6 +2.7
Employment 59.0 +4.8
Deliveries 52.8 -1.9
Input Prices 73.6 +7.4
Wages 64.6 +3.7
Selling Prices 59.1 +6.7
Capacity Utilization (%) 77.6 -3.1
FACTORS: The construction industry index increased further in July --
rising to its highest in the history of the survey that began in September 2005.
All four subsectors expanded. Growth was led by the commercial and
house-building subsector -- with commercial construction expanding at its
fastest in 12 years and house-building growing at its fastest in 3.5 years.
Apartment building recovered from a contraction in June and engineering rose
owing to to a boost from government infrastructure spending in transport. New
orders expanded at the highest in 12 years led by commercial construction which
saw demand from hotels, offices, aged care and warehousing building. Employment
expanded at the fastest rate in almost three years. Wages rose, input prices
rose and selling prices increased -- indicating businesses can pass on some of
the price increases.
TAKEAWAY: The expansion in the construction industry poses an upside risk
to the outlook presented by the Reserve Bank of Australia in the Statement on
Monetary Policy last Friday. The RBA said many of the conditions that would
typically be associated with stronger growth in investment are in place --
including low interest rates and high capacity utilization. "Some spillover from
the large pipeline of public infrastructure activity to private sector
investment could also be envisaged. Similarly, the outlook for private
nonresidential construction has improved a little recently with the level of
approvals trending higher."
COMMENTS: AI Group Head of Policy Peter Burn said the buoyancy of the
sector was evident in levels of current activity and employment growth and
growing order books. "The long-awaited pickup in commercial construction seen
over the past three months is particularly welcome in light of the anticipated
wind-down in apartment building from the very high recent levels and suggests
that the national construction industry will continue to play a leading role in
the economy for some time to come."
HIA principal economist Tim Reardon said the continuing boom in apartment
construction in metro areas, combined with investment in infrastructure
projects, was ensuring strong conditions across the sector. "The housing
industry has been cooling from record highs in 2016 but there remains a
significant amount of work in the pipeline."
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com
[TOPICS: MTABLE,MALDS$,M$A$$$,M$L$$$,MT$$$$]
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.